Japan watchdog: Apple may have breached antitrust rules with iPhone

FILE PHOTO: A member of Apple staff takes pictures as new iPhone X begins to sell at an Apple Store in Beijing, China November 3, 2017. REUTERS/Damir Sagolj/File Photo

TOKYO (Reuters) - Japanese regulators said on Wednesday Apple Inc (AAPL.O) may have breached antitrust rules by forcing mobile service providers to sell its iPhones cheaply and charge higher monthly fees, denying consumers a fair choice.

The Fair Trade Commission (FTC) said that the Japanese unit of Apple had forced NTT Docomo Inc (9437.T) , KDDI Corp (9433.T) and SoftBank Group Corp (9984.T) to offer subsidies and sell iPhones at a discount.

“Obliging carriers to offer subsidies (for iPhones) could have prevented the carriers from offering lower monthly charges and restricted competition,” the FTC said in a statement.

The FTC, which began looking into Apple’s sales practices in 2016, did not punish Apple as the U.S. company had agreed to revise its contracts with the carriers, it said.

Apple representatives in Japan were not immediately available for comment.

The U.S. company accounts for one in every two smartphones sold in Japan, according to MM Research Institute Ltd, making Japan one of its most profitable markets.

The carriers sold the iPhones at a discount, the FTC said, giving Apple an advantage over rivals such as Samsung Electronics (005930.KS).

In order to make up for the losses, they locked consumers into lucrative two- and four-year contracts, the watchdog said.

In revising the contracts, Apple has agreed to allow the carriers to offer customers a choice of buying iPhones without subsidies but paying lower monthly charges, the FTC said.